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“With gas prices at record highs across the U.S., an increasing number of governors and state lawmakers are calling for the suspension of gas taxes to provide relief to motorists who are facing the prospect of even higher pump prices as the country cuts off Russian oil imports.” AP News
“New legislation from Sen. Sheldon Whitehouse (D., R.I.) and Rep. Ro Khanna (D., Calif.) would put a 50% tax, charged for a barrel, on the price difference between the current cost of a barrel of oil and the average cost for a barrel between 2015 and 2019. It would raise an estimated $45 billion a year at $120-a-barrel oil, according to lawmakers behind the proposal.” Wall Street Journal
“A group of Democratic state lawmakers [last] Thursday proposed sending every California taxpayer a $400 tax rebate check to reduce the financial pain they’re suffering because of gas prices and the rising costs of everyday goods.” Los Angeles Times
The right is critical of Democrats’ efforts to provide tax rebates and increase taxes on oil companies.
“[California’s] gasoline prices are averaging $5.79 per gallon compared to $4.29 nationwide. Californians can blame hefty taxes and climate mandates. In 2010 Californians were paying a mere 25 to 30 cents a gallon more than the national average. Then Democrats established a low-carbon fuel standard and cap-and-trade program…
“Illinois Democratic Gov. J.B. Pritzker is also promising to ‘alleviate some pressure on Illinois’ working families,’ after having doubled the state gas tax to 38 cents a gallon in 2019. His proposal: Suspend this year’s inflation-adjusted gas tax increase (two cents a gallon) and send $300 property tax credits to middle-income homeowners. That’s about as much as inflation is costing the average household in a single month, and it doesn’t come close to offsetting higher property taxes from increasing housing values and pension payments. The Democratic strategy is to raise taxes and then redistribute a small cut of the revenues to buy votes.”
Editorial Board, Wall Street Journal
“Last fall, the administration was pressuring these same oil companies to drill less because of climate change. Now it asks them to drill more, while accusing them of purposefully withholding supplies to raise prices. And this week, Senator Elizabeth Warren took the allegations of corporate greed to new heights, calling for a ‘windfall profits tax’ on oil companies that she accuses of controlling the price of gasoline… If you increase taxes on profits that companies earn by selling oil and gas, those companies will supply less, causing prices to go even higher.”
Jonathan A. Lesser, City Journal
“The reflexive antipathy toward private businesses is well off the mark. For starters, oil prices are set in a global market, and no producer has any ability to affect prices. Accusing them of price gouging is a rhetorical dog whistle for the party’s collectivist core. What’s more, the White House's accusations that oil producers don’t want to produce and that there are leased lands not being developed are nonsensical. The proportion of leases that are active is approaching all-time highs, which makes sense given current prices…
“Then there’s the tired leased land talking point — it takes time to explore land, conduct an environmental analysis, determine if it has oil and where it is, procure scarce equipment, workers, and resources needed to start production, and determine whether the project will be profitable for shareholders. There also happens to be thousands of existing leases frozen in litigation. None of the administration’s proposals solve the problem of high gas prices, but they do make the problem harder to solve.”
Charlie Sauer, Washington Examiner
“While the federal government can’t magically get gas prices under $1 per gallon, a few policies other than the federal gas tax of 18.3 cents per gallon make our trips to the pump more expensive. One of them is the ethanol mandate… A gallon of ethanol contains about 30% less energy than a gallon of gasoline, meaning that the fuel blend that cars use is about 3% less fuel-efficient than pure gasoline. The result? People have to buy more fuel to travel the same distance…
“It’s not as if ethanol is good for the environment either. It’s not much better than gasoline, if not just as bad. The other problem with the ethanol mandate is that it artificially increases demand for crops, including corn. Increased demand for corn raises the price. So while this makes corn on the cob and cans of corn more expensive, it also raises the price of corn feed used for livestock. Therefore, it makes meat and other products from livestock more expensive.”
Tom Joyce, Washington Examiner
The left argues for direct consumer relief, a windfall tax on oil companies, and investment in renewables.
The left argues for direct consumer relief, a windfall tax on oil companies, and investment in renewables.
“The reality is, presidents have little influence on gas prices. Oil trades in a global market. Drilling in the United States is done by private companies, not the government… Biden could release more oil from [the] Strategic Petroleum Reserve, but it would have minimal impact. Cutting gas taxes, another idea that politicians turn to when oil prices are rising, would be a mistake. It would likely cause a surge in gas purchases and a loss of revenue for road repairs…
“A better step Mr. Biden could take is to work with Congress to pass aid for lower-income families if gas prices remain high. This could have a double benefit of offsetting higher costs and encouraging households to use less energy so they can keep any leftover money.”
Editorial Board, Washington Post
“In most states, gas taxes help finance road construction and repair. That’s sensible: People who use the roads the most pay the most to support them. Suspending the gas tax would break that link. More of the money for construction and repairs would have to come out of the general fund, which everyone pays into…
“One other big advantage that writing checks has over suspending the gas tax: When the government sends a check, all of the money goes to consumers. If instead it cuts a tax, some of the money goes to the producers (gas stations, oil companies) because the retail price doesn’t fall as much as the tax does.”
Peter Coy, New York Times
“Last year, when Americans were already struggling to pay their heating bills and fill up their gas tanks, the biggest [private] oil companies (Shell, Chevron, BP, and Exxon) posted profits totaling $75bn. This year, courtesy of Putin, big oil is on the way to a far bigger bonanza. How are the oil companies using this windfall?…
“They’re buying back their own stock in order to give their stock prices even more of a boost. Last year they spent $38bn on stock buybacks – their biggest buyback spending spree since 2008. This year, thanks largely to Putin, the oil giants are planning to buy back at least $22bn more…
“As Chevron’s top executive, Mike Wirth, said in September, ‘We could afford to invest more’ but ‘the equity market is not sending a signal that says they think we ought to be doing that.’ Translated: Wall Street says the way to maximize profits is to limit supply and push up prices instead… What to do? Hit big oil with a windfall profits tax… and use the money to provide quarterly checks to Americans facing sticker shock as inflation continues to soar… It’s good policy, it’s good politics and it’s the right thing to do.”
Robert Reich, The Guardian
“Unlike during previous crises, renewables and electric vehicles are now mature technologies that could be deployed immediately to cut oil demand. We no longer have to dream: A future where the U.S. economy is far less vulnerable to wild oil price swings—the goal of U.S. energy policy for the past 50 years—is now within reach. But instead of seizing it, lawmakers are sitting around…
“A few months ago, the United States seemed to be on the verge of deploying solar and wind farms, geothermal plants, and even advanced nuclear plants across the country. As part of Biden’s overstuffed Build Back Better package, the House had passed ambitious legislation to deploy zero-carbon energy sources at never-before-seen scales and with remarkable efficiency… “Today, those climate-policy plans seem to have imploded… [Congress’s] failure to pass any comprehensive energy policy is the core of the problem.”
Robinson Meyer, The Atlantic
A libertarian's take
“While rebates and tax credits are not a great means of responding to rising gas prices (or inflation generally), they're not a bad way of spending massive budget surpluses. Across the country, state governments find themselves flush with cash—thanks to gobs of unspent federal relief money and higher than expected pandemic-era tax revenues…
“Congress' provision of that federal aid was fiscally irresponsible given our large and growing national debt and seemingly unnecessary given how much of it is just sitting in state government coffers. But there's no unringing that bell. Giving that excess money directly to taxpayers in the form of cash means individuals, not state legislators, will ultimately decide how it's spent.”
Christian Britschgi, Reason
